Understanding Google’s Earnings Report and Stock Movement
Google's Recent Earnings Report: An Overview
Google (NASDAQ: GOOGL) recently reported its fourth quarter earnings, showcasing an adjusted EPS of $2.15, which slightly surpassed analyst expectations of $2.13. This marks an impressive streak for the company, as it has beat earnings estimates for eight consecutive quarters.
Understanding the Earnings Performance
Despite the positive earnings report, the beat was minimal, at just 0.9%, a significant reduction from the impressive average of 8.6% over the past eight quarters. Earnings growth has shown signs of slowing since the beginning of 2024, however, it still remains robust, with growth exceeding 30% over the last three quarters.
Sales Performance and Expectations
When analyzing sales, Google recorded $81.621 billion after taking out traffic acquisition costs for the quarter, which narrowly exceeded the street estimates of $81.6 billion. This achievement continues the trend of exceeding sales expectations consistently over the last eight quarters.
Interestingly, the sales growth rate remains steady in the mid-teens, demonstrating the company’s ongoing ability to generate revenue, albeit at slower growth rates compared to previous periods.
Market Reaction and Future Growth Projections
The immediate market reaction to the earnings announcement saw Google's stock price drop approximately 8%. This decline followed guidance that forecasted capital expenditures of $75 billion for the coming year, a projection that caught many analysts off guard. Such a significant CAPEX expense is expected to impact earnings negatively.
Looking ahead, analysts predict a reduced EPS growth of about 14%, which contrasts sharply with the previously observed growth exceeding 30% in recent quarters. Additionally, a 12% growth in sales is anticipated over the next four quarters, surpassing the broader market average represented by the S&P 500.
Stock Analysis and Price Trends
Currently, Google’s stock trades at a forward Price-to-Earnings (PE) ratio of 21.5x, with a price-to-growth ratio of around 1.5, which is favorable relative to other major growth stocks. In recent trading sessions, the stock has maintained its 50-day moving average, having encountered previous swing lows near the $181.50 mark.
Future Resistance Levels
The next resistance levels to watch are set at the $201 mark, along with the price gap that was left behind prior to the earnings release. Furthermore, there is a notable rising trend line on the long-term chart, which may become impactful if the current downward momentum persists.
Frequently Asked Questions
What was Google’s adjusted EPS in the latest earnings report?
Google reported an adjusted EPS of $2.15 for the fourth quarter, slightly exceeding analyst predictions of $2.13.
How have Google's earnings estimates changed recently?
While Google has consistently beat earnings estimates over the past eight quarters, the most recent adjustment was only a 0.9% increase over expectations.
What are the projections for Google's sales growth?
Analysts expect Google to achieve a sales growth of about 12% over the next four quarters, following consistent performance in previous periods.
How has the market reacted to Google’s latest earnings?
After the earnings report, Google’s stock price experienced an approximate 8% drop, likely due to increased capital expenditure forecasts.
What resistance levels should investors consider for Google's stock?
Investors should monitor the $201 resistance level and the previous price gaps prior to earnings when evaluating potential stock movements.
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